Budget agreement reached

Rep. Paul Ryan and Sen. Patty Murray unveiled a two-year budget agreement late Tuesday night that they say will end years of bitter budget wars on Capitol Hill.

The framework amounts to a modest deal that averts another government shutdown, replaces the sequester and provides a level of certainty on spending that hasn’t been seen in Washington for several years. But it doesn’t raise the debt ceiling, which Congress must address sometime next spring. And it’s far from a grand bargain that overhauls entitlement programs or the tax code — an approach the negotiators refused to entertain for fear of getting bogged down.

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The bipartisan package includes $63 billion of “sequester relief,” $85 billion of total savings, and $23 billion in net deficit reduction. The agreement would set the discretionary spending level for fiscal year 2014 at $1.012 trillion, and $1.014 trillion in FY 2015.

President Barack Obama backed the deal and Ryan and Murray predicted that it would pass both the House and Senate. Still, both lawmakers acknowledged that conservatives and progressives will find items they don’t like in the package.

For instance, a number of top House Democrats are unhappy the agreement does not include an extension in federal unemployment benefits expiring on Dec. 28. Meanwhile, federal workers hired after Dec. 31, 2013, will have to pay more toward their retirement.

Conservatives will be equally displeased that the plan will require businesses to pay higher premiums to the federal government to guarantee their pension benefits.

Those under age 62 who retired from the military will see a slightly smaller annual cost-of-living increase. Tickets prices will rise for airline passengers. And Medicare providers will face $22 billion in across-the-board cuts in 2022-23, beyond the time period covered by the current Budget Control Act.

Murray and Ryan, however, stood side-by-side to hail the deal as progress, not perfection. They both repeatedly said it was just a “first step.” And both lawmakers said far more work needs to be done to revamp the U.S. government’s fiscal outlook, while still urging their colleagues to back this agreement.

“This bill reduces the deficit by $23 billion, it does not raise taxes, and it cuts spending in a smarter way,” Ryan said at Tuesday night press conference. “I see this agreement as a step in the right direction.”

“I’m proud of this agreement,” Ryan added. “It reduces the deficit—without raising taxes. And it cuts spending in a smarter way. It’s a firm step in the right direction, and I ask all my colleagues in the House to support it.”

“This agreement breaks through the recent dysfunction to prevent another government shutdown and roll back sequestration’s cuts to defense and domestic investments in a balanced way,” said Murray. “It’s a good step in the right direction that can hopefully rebuild some trust and serve as a foundation for continued bipartisan work.”

In a statement issued by the White House, Obama also praised the Ryan-Murray package.

“This agreement doesn’t include everything I’d like – and I know many Republicans feel the same way. That’s the nature of compromise,” Obama said. “But it’s a good sign that Democrats and Republicans in Congress were able to come together and break the cycle of short-sighted, crisis-driven decision-making to get this done.”

Party leaders on both sides of the Capitol, including House Majority Leader Eric Cantor (R-Va.) and Senate Majority Whip Dick Durbin (D-Ill.) also issued statements backing the deal.

Rep. Chris Van Hollen (D-Md.), ranking member on the House Budget Committee, offered more tepid support.

“This agreement isn’t perfect, but it is certainly better than no agreement at all,” said Van Hollen, a key player in the House Democratic Caucus. “This difficult negotiation has gone through many phases. The final product replaces part of the job-killing sequester without disproportionally hitting working families, including hundreds of thousands of public servants. It’s a small, but good step forward for our country.”

Both Murray and Ryan said the agreement, coming after weeks of tightly controlled talks between the two Budget Committee chairmen, will provide certainty for business leaders and financial markets that has been missing since the GOP takeover of Congress in 2010.